Alabama bankruptcy laws: What are the Laws Regarding Bankruptcies in the State of Alabama?
In bankruptcies under Chapter 7, bankruptcy trustees or creditors are prevented from seizing a part of your property or your entire property under Alabama law. On the other hand, for bankruptcies under Chapter 13, you are usually permitted to retain your entire property and assets. However, specific exceptions may be applicable, and so it makes sense to get in touch with a bankruptcy attorney in Alabama to know which assets are safe when you file bankruptcy in the state.
Information related to means testing and credit counseling providers
To file bankruptcy, two kinds of information are required specific to the state of Alabama. You can find them on the website of U.S. Trustee. These are means testing information and credit counseling providers, who are approved.
1. Means testing information
Before being eligible for bankruptcy under Chapter 7, it is imperative for your income to clear the “means test.” When the median income of Alabama is higher than your family income, you are qualified. However, in case the median income of the state is lower than your family income, you could still be eligible after deducting specific standard expenses.
2. Approved course providers
A majority of bankruptcy filers have to clear a couple of education courses. These are a course on credit counseling before filing bankruptcy and a course on debt management afterward. The website of U.S. courts has the list of all approved education providers.
Also, in several scenarios, Chapter 13 bankruptcy is preferable in comparison to Chapter 7 bankruptcy. Bankruptcy under Chapter 13 is the sole option when you fail to make business or mortgage payments, and you wish to retain your property in some other state or Alabama when the bankruptcy process ends. Such a bankruptcy enables you to pay up the overdue payments over some time while the original agreement on the mortgage is reinstated. Ideally speaking, when Alabama bankruptcy exemptions do not cover your valuable property, which you desire to retain, it could be a better alternative to file for Chapter 13 bankruptcy.
On the other hand, a majority of the residents in Alabama who wish to clear their massive and overdue debt without paying it back, bankruptcy under Chapter 7 is a more lucrative option.
Merits of Chapter 7 filing in Alabama
- Once the bankruptcy has been discharged, a debtor’s only outstanding debts would be for his/her secured assets where they may opt to put their signatures on a “Reaffirmation Agreement.”
- The case is over in around 3 to 6 months.
- No requirement for minimum debt amount.
- Property acquired, and wages earned by the person post-filing a bankruptcy is his/hers. They do not belong to the bankruptcy court or the creditors.
- There is instant protection against the collection efforts of the creditors on the bankruptcy filing date.
Merits of Chapter 13 bankruptcy filing in Alabama
- Debts can be lowered under the payment plan of Chapter 13 unlike in Chapter 7 where debts do not get canceled.
- Chapter 13 can consider more debts to be dischargeable.
- There is instant protection against wage garnishment and collection efforts of the creditors.
- Chapter 13 bankruptcy can be filed at any time.
- When the plan as per Chapter 13 offers for payment in full, the co-signers remain immune from the efforts of the creditors.
- Bankruptcy can be filed repeatedly.
- There is more time for the bankrupt person to pay those debts, which cannot be discharged by any of the two chapters.
- Creditors can be separated by class, and different categories of these creditors will get distinct payment percentages.